Under UK insolvency law, an insolvent company can enter into a voluntary agreement (CVA). The CVA is a form of composition similar to the personal IVA (individual voluntary agreement) in which an insolvency procedure allows a company with debt problems or insolvent to enter into a voluntary agreement with its creditors on the repayment of all or part of its corporate debt over an agreed period. [Citation required] The application for a CVA may be submitted with the consent of all company executives, the company`s legal directors or the designated liquidator. [1] As a general rule, voluntary severance pay is proposed at a time when the company benefits by reducing the number of employees and the costs of wages and benefits. High-income long-term workers who reach retirement age can, for example, benefit from a pre-retirement scheme in the hope of cancelling layoffs. Since a voluntary severance package benefits both the employer and the employee who accepts the package, it is sometimes referred to as a “golden handshake.” A voluntary agreement of the company can only be implemented by a judicial administrator who develops a proposal for creditors. A creditors` meeting is held to verify whether the CVA is accepted. As long as 75% (depending on the value of the debt) of the voting creditors agree, the CVA is accepted. All creditors of the company are then subject to the terms of the proposal, whether they have voted or not. Creditors are also not in a position to take further legal action as long as conditions are met and existing legal actions, such as a liquidation decision, are suspended.

[2] The golden handle of the hand is closely linked to the golden parachute, a severance agreement that offers an executive at the end of the contract a substantial package, usually before an event that could have a less favourable outcome for the executive, such as a buyout, merger or scandal. Gold handcuffs refer to another type of agreement in which employees are effectively chained by financial incentives that motivate them to stay in a company longer than they would otherwise. Directors have a legal obligation to act properly and responsibly and to put the interests of their creditors first. Risks associated with winding up a business may include disqualification from the activity of director of other companies, as well as personal reputation as a director. In extreme cases, directors may be personally considered to be subject to assessment for erroneous payments to creditors. However, since a voluntary agreement of the company is in the interest of creditors, there is no investigation into the director`s conduct. To place a company in a voluntary agreement (CVA) of a company, there is a specific process that must be followed to assess the profitability of the agreement and put in place this process of turnaround the business. The VPA aims to ensure that wood and by-products exported to the EU come from legal sources.

The agreements also help timber-exporting countries end illegal logging by improving the regulation and governance of the forestry sector. If three-quarters of CVA voters disagree, your company may face a voluntary liquidation. Voluntary liquidation (CVL) is a formal insolvency procedure in which the directors of an insolvent company voluntarily decided to cease their activities and dissolve the company. Although the process ends on a voluntary basis, it often follows the accumulation of many months of financial difficulties when the possibility of a successful turning point is exhausted. While this is not an ideal situation for an insolvent company that will not have a viable future in the future as a profitable business, voluntary liquidation by a CVL may be the best solution for all concerned.